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Lie. Conceal. Fabricate.

Stephen Harper's $35 Billion Income Trust Scandal

Stephen Harper made a solemn election pledge to never tax Income Trusts. He lied, and in the process destroyed $35 billion in Canadians' and foreign investors' hard-earned savings. Harper's excuse was that income trusts cause tax leakage. His Finance Minister refuses to release proof of tax leakage because there is no proof. What is Harper's real hidden agenda and who is it that actually benefits? Answer: corporate Canada, Life Insurance companies, foreign private equity, big pension plans and US oil.

Tax Leakage: the Big Lie

Income trusts do not cause tax leakage, in fact the reverse is true. The highly guarded and secretive Department of Finance analysis underlying Harper's assertion of tax leakage fails to include ANY of the taxes paid by the 38% of income trusts that are held in RRSPs and retirement accounts.

No wonder they think there is leakage - they left out almost half of the taxes!

These theoretical analyses are only as good as their assumptions, data and methodology, and clearly Finance used the wrong methodology. A more definitive analysis can be had by looking at the real world. BMO Capital Markets performed such a real world exercise by looking at all 126 of the businesses that converted to income trusts since 2001. Here are the summary results:

Average Taxes Paid
Before Conversion to Income Trust:
($3.3 million x 126)$415.8 million

Average Taxes Paid
After Conversion to Income Trust:
($9.8 million x 126)$1.234 billion

This comprehensive real world analysis clearly shows that Income Trusts generate more tax revenue than corporations by a factor of 3 times. There is no tax leakage, so why does Flaherty keep insisting there is? Who benefits? What are Harper's motives? Is this Harper's idea of Accountability?

Flaherty's "Proof"

Download all of the blacked-out documents released under the Access to Information Law. See what Stephen Harper means by "accountability" and "transparency".